US lawmakers are determined to resolve thie credit crisis...

US lawmakers are determined to resolve thie credit crisis soon.

The Bloomberg article below makes things sound better than originally expected.

Paulson, Bernanke Seek `Comprehensive' Crisis Plan (Update1)

By Alison Vekshin and James Rowley

Sept. 18 (Bloomberg) -- Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke pledged to work through the weekend on a plan requiring legislation aimed at alleviating the credit crisis.

The two regulators, in talks with lawmakers late today, sought support for a plan to help financial institutions remove illiquid mortgage-related assets from their balance sheets. Congressional leaders said they intend to pass legislation within days.

``Absolutely, this is good news,'' said Marilyn Cohen, who manages $185 million in bonds as president and chief executive of Envision Capital Management in Los Angeles. ``It will be like New Year's Eve for the market tomorrow morning. Hopefully, this will give the trading desks the confidence to start making markets again.''

The Treasury and Fed chiefs are trying to prevent a credit crisis that has lead to $518 billion in global losses and writedowns from spreading through the U.S. economy.

``What we are working on now is an approach to deal with the systemic risk and the stresses in our capital markets,'' Paulson told reporters after the meeting. ``We talked about a comprehensive approach that will require legislation to deal with illiquid assets on financial institutions in the United States on their balance sheet.''

Stronger Response

An increasing number of lawmakers are advocating a stronger response to the crisis sparked by record homeowner defaults. The turmoil swept Lehman Brothers Holdings Inc. into bankruptcy three days ago and prompted government takeovers of Fannie Mae, Freddie Mac and American International Group Inc. this month.

``I'm hopeful that in the coming days we'll have a proposal that will pass this Congress,'' House Minority Leader John Boehner told reporters.

The Fed's takeover of AIG followed its March agreement to take on $29 billion of Bear Stearns Cos. assets to secure the company's takeover by JPMorgan Chase & Co.

House Speaker Nancy Pelosi said it was a ``very productive'' meeting on an ``initiative to help resolve the financial crisis in our country.''

The goal of the proposal is to help `insulate Main Street from Wall Street,'' she said, adding she was ```very eager'' to see the Treasury-Fed proposal.

Senate Majority Leader Harry Reid, the Nevada Democrat, said the plan would come within ``hours,'' not days.

``I thank the congressional leadership for a very, very positive meeting,'' Bernanke told reporters after the meeting. ``We look forward to working closely with Congress to resolve this financial crisis and get our economy moving again.''

Citigroup Inc., JPMorgan Chase Co., Bank of America Corp., Goldman Sachs Group Inc., Merrill Lynch & Co. and Lehman Brothers Holdings Inc. alone had more than $500 billion as of June 30 of so-called Level 3 assets, or ones whose values they say can only be determined through internal models because of illiquid markets, according to data in a Sept. 15 report from New York-based bond research firm CreditSights Inc.

To contact the reporter on this story: Alison Vekshin in Washington at [email protected]; Jim Rowley in Washington at [email protected]

Last Updated: September 18, 2008 20:58 EDT